If your PC has internet access on which you are running xp mode, you will run into security issues if you keep on running it. So your current priority should be to migrate any software or hardware that requires you running XP mode to something that runs natively on Windows 7.

I don't know about XP mode. but do agree with Rindi about security issues. Having said that though, your security should NOT be solely based on XP updates. Some of this will depend on what regulations you are under that may force you to move away from XP and how good the rest of your security is. If you have a good hardware-based firewall that will continue to work as will your AV solution and any IPS/IDS device you might be using. If you have implemented good multi-layered security, I'm not sure I'd lose an sleep over it, but at the same time, that's a judgement call that needs to be made with the above as concerns.

There's NO difference from a functional perspective between a "bare metal" XP system and XP Mode -- the latter is simply a virtual machine running XP with some GUI enhancements to make it more "seamless."

So all of the various discussions about security risks of maintaining XP systems are equally applicable to XP Mode. There simply won't be additional security updates -- so there is some risk if you continue to use any XP system (including XP Mode). How much risk that actually is depends to a large extent on just how you're using the system [i.e. if you don't use it for any internet activity, the risk is VERY low].

If you're stopping all XP usage due to corporate policies, then you should do the same with XP Mode. Otherwise, whatever your policy is with regards to XP systems should apply to XP Mode as well.

At end of life for XP no further development of updates/fixes will be pursued, that includes security or any other issue. So, although the probability of a new security issue for XP is small it does exist, and therefore it is highly recommended you upgrade your OS prior to end of life.

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